Inside Uber’s Auto-Lease Machine, Where Almost Anyone Can Get a Car

And now Wall Street is making a $1 billion bet on Uber’s lease business

In its relentless pursuit for growth, Uber needs new drivers, and many of those drivers need cars. To help them get started, Uber has been offering short-term leases since July through a wholly owned Delaware-based subsidiary called Xchange Leasing, LLC. It partners with auto dealerships, advertises to drivers, manages risk, and even pays repo men to chase down cars whose drivers aren’t making their payments.

Xchange may be key to Uber’s continued expansion as it tangles with Lyft in the U.S. and a bevy of competitors abroad. Uber announced a partnership with Toyota last week to finance even more cars. This year, Uber said its financing and discount programs, which include Xchange, will put more than 100,000 drivers on the road. That requires dipping into the vast pool of people with bad or no credit.

In a deal led by Goldman Sachs, Xchange received a $1 billion credit facility to fund new car leases, according to a person familiar with the matter. The deal will help Uber grow its U.S. subprime auto leasing business and it will give many of the world’s biggest financial institutions exposure to the company’s auto leases. The credit facility is basically a line of credit that Xchange can use to lease out cars to Uber drivers.

Xchange caters to people who have been rejected by other lenders. The program is run by Andrew Chapin, who pitched it to Uber Chief Executive Officer Travis Kalanick in 2012. Before joining Uber, Chapin was a Goldman Sachs commodities trader. He oversees all of Uber’s auto-financing efforts, including a partnership with Enterprise Rent-A-Car and vehicle-purchase discounts. “I want the driver to get an option that is best for them,” Chapin said. “I try to provide a menu of options that the industry thus far has not provided.”